IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/23420.html
   My bibliography  Save this paper

Are educational mismatches responsible for the ‘inequality increasing effect’ of education?

Author

Listed:
  • Budria, Santiago

Abstract

This paper asks whether educational mismatches can account for the positive association between education and wage inequality found in the data. We use two different data sources, the European Community Household Panel and the Portuguese Labour Force Survey, and consider several types of mismatch, including overqualification, underqualification and skills mismatch. We test our hypothesis using two different measurement methods, the ‘statistical’ and the ‘subjective’ approach. The results are robust to the different choices and unambiguously show that the positive effect of education on wage inequality is not due to the prevalence of educational mismatches in the labour market.

Suggested Citation

  • Budria, Santiago, 2010. "Are educational mismatches responsible for the ‘inequality increasing effect’ of education?," MPRA Paper 23420, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:23420
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/23420/1/MPRA_paper_23420.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
    2. Etienne Wasmer & Peter Fredriksson & Ana Lamo & Julian Messina & Giovanni Peri, 2005. "The Macroeconomics of Education," Post-Print hal-03458955, HAL.
    3. Pedro Carneiro & Karsten T. Hansen & James J. Heckman, 2003. "Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College," NBER Working Papers 9546, National Bureau of Economic Research, Inc.
    4. Budría, Santiago & Moro-Egido, Ana I., 2008. "Education, educational mismatch, and wage inequality: Evidence for Spain," Economics of Education Review, Elsevier, vol. 27(3), pages 332-341, June.
    5. Bauer, Thomas K., 2002. "Educational mismatch and wages: a panel analysis," Economics of Education Review, Elsevier, vol. 21(3), pages 221-229, June.
    6. F Green & Steven McIntosh & Anna Vignoles, 1999. "Overeducation and Skills - Clarifying the Concepts," CEP Discussion Papers dp0435, Centre for Economic Performance, LSE.
    7. Séamus McGuinness, 2006. "Overeducation in the Labour Market," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 387-418, July.
    8. Kiker, B. F. & Santos, Maria C. & de Oliveira, M. Mendes, 1997. "Overeducation and undereducation: Evidence for Portugal," Economics of Education Review, Elsevier, vol. 16(2), pages 111-125, April.
    9. Battu, H. & Belfield, C.R. & Sloane, P.J., 2000. "How Well Can We Measure Graduate Over- Education and Its Effects?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 171, pages 82-93, January.
    10. Carneiro, Pedro & Hansen, Karsten T. & Heckman, James J., 2003. "Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College Choice," IZA Discussion Papers 767, Institute of Labor Economics (IZA).
    11. Joop Hartog & Pedro Pereira & Jose Vieira, 2001. "Changing returns to education in Portugal during the 1980s and early 1990s: OLS and quantile regression estimators," Applied Economics, Taylor & Francis Journals, vol. 33(8), pages 1021-1037.
    12. Martins, Pedro S. & Pereira, Pedro T., 2004. "Does education reduce wage inequality? Quantile regression evidence from 16 countries," Labour Economics, Elsevier, vol. 11(3), pages 355-371, June.
    13. Cunha, Flavio & Heckman, James J., 2007. "Identifying and Estimating the Distributions of Ex Post and Ex Ante Returns to Schooling," Labour Economics, Elsevier, vol. 14(6), pages 870-893, December.
    14. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
    15. Hogan, Vincent & Walker, Ian, 2007. "Education choice under uncertainty: Implications for public policy," Labour Economics, Elsevier, vol. 14(6), pages 894-912, December.
    16. Joop Hartog & Luis Díaz-Serrano, 2007. "Earnings risk and demand for higher education: A cross-section test for Spain," Journal of Applied Economics, Universidad del CEMA, vol. 10, pages 1-28, May.
    17. repec:hal:spmain:info:hdl:2441/9064 is not listed on IDEAS
    18. Richard R. Verdugo & Naomi Turner Verdugo, 1989. "The Impact of Surplus Schooling on Earnings: Some Additional Findings," Journal of Human Resources, University of Wisconsin Press, vol. 24(4), pages 629-643.
    19. Pedro Carneiro & Karsten T. Hansen & James J. Heckman, 2003. "2001 Lawrence R. Klein Lecture Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College Choice," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 361-422, May.
    20. Dieter Verhaest & Eddy Omey, 2010. "The determinants of overeducation: different measures, different outcomes?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(6), pages 608-625, September.
    21. Pedro Telhado Pereira & Pedro Silva Martins, 2000. "Does education reduce wage inequality? Quantile regressions evidence from fifteen European countries," Nova SBE Working Paper Series wp379, Universidade Nova de Lisboa, Nova School of Business and Economics.
    22. Dolton, Peter & Vignoles, Anna, 2000. "The incidence and effects of overeducation in the U.K. graduate labour market," Economics of Education Review, Elsevier, vol. 19(2), pages 179-198, April.
    23. Trostel, Philip & Walker, Ian & Woolley, Paul, 2002. "Estimates of the economic return to schooling for 28 countries," Labour Economics, Elsevier, vol. 9(1), pages 1-16, February.
    24. Vieira, Jose A. C., 1999. "Returns to education in Portugal," Labour Economics, Elsevier, vol. 6(4), pages 535-541, November.
    25. P. J. Sloane & H. Battu & P. T. Seaman, 1999. "Overeducation, undereducation and the British labour market," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1437-1453.
    26. Rubb, S., 2003. "Overeducation in the labor market: a comment and re-analysis of a meta-analysis," Economics of Education Review, Elsevier, vol. 22(6), pages 621-629, December.
    27. Dolton, Peter J. & Silles, Mary A., 2008. "The effects of over-education on earnings in the graduate labour market," Economics of Education Review, Elsevier, vol. 27(2), pages 125-139, April.
    28. Flavio Cunha & James Heckman & Salvador Navarro, 2005. "Separating uncertainty from heterogeneity in life cycle earnings," Oxford Economic Papers, Oxford University Press, vol. 57(2), pages 191-261, April.
    29. Bonin, Holger & Dohmen, Thomas & Falk, Armin & Huffman, David & Sunde, Uwe, 2007. "Cross-sectional earnings risk and occupational sorting: The role of risk attitudes," Labour Economics, Elsevier, vol. 14(6), pages 926-937, December.
    30. Ron Dekker & Andries de Grip & Hans Heijke, 2002. "The effects of training and overeducation on career mobility in a segmented labour market," International Journal of Manpower, Emerald Group Publishing Limited, vol. 23(2), pages 106-125, March.
    31. Andries de Grip & Hans Bosma & Dick Willems & Martin van Boxtel, 2008. "Job-worker mismatch and cognitive decline," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 237-253, April.
    32. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
    33. McGuinness, Seamus & Bennett, Jessica, 2007. "Overeducation in the graduate labour market: A quantile regression approach," Economics of Education Review, Elsevier, vol. 26(5), pages 521-531, October.
    34. Cohn, Elchanan & Khan, Shahina P., 1995. "The wage effects of overschooling revisited," Labour Economics, Elsevier, vol. 2(1), pages 67-76, March.
    35. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    36. Fersterer, Josef & Winter-Ebmer, Rudolf, 2003. "Are Austrian returns to education falling over time?," Labour Economics, Elsevier, vol. 10(1), pages 73-89, February.
    37. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    38. Omar Arias & Walter Sosa-Escudero & Kevin F. Hallock, 2001. "Individual heterogeneity in the returns to schooling: instrumental variables quantile regression using twins data," Empirical Economics, Springer, vol. 26(1), pages 7-40.
    39. S. Mcguinness, 2003. "Graduate overeducation as a sheepskin effect: evidence from Northern Ireland," Applied Economics, Taylor & Francis Journals, vol. 35(5), pages 597-608.
    40. Felix Büchel & Andries de Grip & Antje Mertens (ed.), 2003. "Overeducation in Europe," Books, Edward Elgar Publishing, number 3054.
    41. Chernozhukov, Victor & Hansen, Christian & Jansson, Michael, 2007. "Inference approaches for instrumental variable quantile regression," Economics Letters, Elsevier, vol. 95(2), pages 272-277, May.
    42. Hartog, Joop & Vijverberg, Wim P.M., 2007. "On compensation for risk aversion and skewness affection in wages," Labour Economics, Elsevier, vol. 14(6), pages 938-956, December.
    43. Dieter Verhaest & Eddy Omey, 2006. "The Impact of Overeducation and its Measurement," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 77(3), pages 419-448, July.
    44. Telhado Pereira, Pedro & Silva Martins, Pedro, 2002. "Is there a return-risk link in education?," Economics Letters, Elsevier, vol. 75(1), pages 31-37, March.
    45. Machin, Stephen, 1996. "Wage Inequality in the UK," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 12(1), pages 47-64, Spring.
    46. Duncan, Greg J. & Hoffman, Saul D., 1981. "The incidence and wage effects of overeducation," Economics of Education Review, Elsevier, vol. 1(1), pages 75-86, February.
    47. Peter Dolton & Rita Asplund & Erling Barth (ed.), 2009. "Education and Inequality Across Europe," Books, Edward Elgar Publishing, number 12921.
    48. Groot, Wim & Maassen van den Brink, Henriette, 2000. "Overeducation in the labor market: a meta-analysis," Economics of Education Review, Elsevier, vol. 19(2), pages 149-158, April.
    49. Joop Hartog & Erik Plug & Luis Diaz Serrano & Jose Vieira, 2003. "Risk compensation in wages – a replication," Empirical Economics, Springer, vol. 28(3), pages 639-647, July.
    50. Daly, Mary C. & Buchel, Felix & Duncan, Greg J., 2000. "Premiums and penalties for surplus and deficit education: Evidence from the United States and Germany," Economics of Education Review, Elsevier, vol. 19(2), pages 169-178, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Seamus McGuinness & Konstantinos Pouliakas & Paul Redmond, 2018. "Skills Mismatch: Concepts, Measurement And Policy Approaches," Journal of Economic Surveys, Wiley Blackwell, vol. 32(4), pages 985-1015, September.
    2. Chenhong Peng & Paul Siu Fai Yip & Yik Wa Law, 2019. "Intergenerational Earnings Mobility and Returns to Education in Hong Kong: A Developed Society with High Economic Inequality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 143(1), pages 133-156, May.
    3. Maqbool H. Sial & Ghulam Sarwar & Mubashra Saeed, 2019. "Surplus Education and Earnings Differentials in Pakistan: A Quantile Regression Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 24(2), pages 93-114, July-Dec.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Galasi, Péter, 2009. "A túl- és az alulképzés bérhozama 25 európai országban [Returns for over-education and under-education for 25 European countries]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 197-215.
    2. Santiago Budria, 2010. "Schooling and the distribution of wages in the European private and public sectors," Applied Economics, Taylor & Francis Journals, vol. 42(8), pages 1045-1054.
    3. Dieter Verhaest & Eddy Omey, 2012. "Overeducation, Undereducation and Earnings: Further Evidence on the Importance of Ability and Measurement Error Bias," Journal of Labor Research, Springer, vol. 33(1), pages 76-90, March.
    4. Shujaat Farooq, 2015. "Job Mismatches in Pakistan: Is there Some Wage Penalty to Graduates?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(2), pages 147-164.
    5. Peter Galasi, 2008. "The effect of educational mismatch on wages for 25 countries," Budapest Working Papers on the Labour Market 0808, Institute of Economics, Centre for Economic and Regional Studies.
    6. Kampelmann, Stephan & Rycx, François, 2012. "The impact of educational mismatch on firm productivity: Evidence from linked panel data," Economics of Education Review, Elsevier, vol. 31(6), pages 918-931.
    7. Knud MUNK, 2010. "Optimal Border Taxes in Developing Countries: On the Importance of a Large Informal Sector," EcoMod2010 259600119, EcoMod.
    8. Séamus McGuinness, 2006. "Overeducation in the Labour Market," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 387-418, July.
    9. Marta Palczyńska, 2021. "Overeducation and wages: the role of cognitive skills and personality traits," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 21(1), pages 85-111.
    10. L. Cattani & G. Guidetti & G. Pedrini, 2014. "Assessing the incidence and wage effects of overeducation among Italian graduates using a new measure for educational requirements," Working Papers wp939, Dipartimento Scienze Economiche, Universita' di Bologna.
    11. Ma del Mar Salinas-Jim鮥z & Marta Rahona-L󰥺 & In鳠P. Murillo-Huertas, 2013. "Gender wage differentials and educational mismatch: an application to the Spanish case," Applied Economics, Taylor & Francis Journals, vol. 45(30), pages 4226-4235, October.
    12. Luca Cattani & Giovanni Guidetti & Giulio Pedrini, 2018. "Overeducation among Italian graduates: do different measures diverge?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 491-521, August.
    13. Iñaki Iriondo & Teodosio Pérez-Amaral, 2013. "The Effect of Educational Mismatch on Wages Using European Panel Data," Working Papers 700, Queen Mary University of London, School of Economics and Finance.
    14. McGuinness, Seamus & Bennett, Jessica, 2007. "Overeducation in the graduate labour market: A quantile regression approach," Economics of Education Review, Elsevier, vol. 26(5), pages 521-531, October.
    15. Santiago Budría & Pedro Telhado-Pereira, 2011. "Educational Qualifications And Wage Inequality: Evidence For Europe," Revista de Economia Aplicada, Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica, vol. 19(2), pages 5-34, Autumn.
    16. Christian K. Darko & Kennedy K. Abrokwa, 2020. "Do you really need it? Educational mismatch and earnings in Ghana," Review of Development Economics, Wiley Blackwell, vol. 24(4), pages 1365-1392, November.
    17. Verhaest, Dieter & Schatteman, Tom, 2010. "Overeducation in the early career: an analysis using sequence techniques," Working Papers 2010/09, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    18. Castro, Juan Francisco & Ortega, Lorena & Yamada, Gustavo & Mata, David, 2022. "The Magnitude and Predictors of Overeducation and Overskilling in Latin America: Evidence from PIAAC," IZA Discussion Papers 15143, Institute of Labor Economics (IZA).
    19. Iñaki Iriondo & Teodosio Pérez-Amaral, 2013. "The Effect of Educational Mismatch on Wages Using European Panel Data," Working Papers 700, Queen Mary University of London, School of Economics and Finance.
    20. Brian Clark & Clément Joubert & Arnaud Maurel, 2017. "The career prospects of overeducated Americans," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-29, December.

    More about this item

    Keywords

    Overeducation; returns to education; educational mismatch; within-groups wage inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:23420. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.